Corporate profitability

Healthy profits, few jobs

How long can corporate America’s profit rebound continue?

THE quarterly results season that is drawing to a close has revealed that corporate profits are back within a whisker of the all-time highs achieved before the downturn in late 2008. American profits are already back to 11% of GDP. Corporate America is reaping the rewards from cutting costs, especially in capital investment and labour, through an unpleasant mix of redundancies, reduced hours and lower pay. The great squeeze cannot go on forever, of course, but it shows no sign of slackening. Figures released on Friday August 6th show the unemployment rate remained steady at 9.5% in July, but non-farm payroll employment fell by 131,000, some 65,000 more than expected. The great decoupling of profits from jobs could last for a long time.